Secession and Risk Management

My business expertise is in the Insurance Risk Management field. I consult individuals and businesses on the best ways to manage their risks. So, when considering the concepts of secession for US states, I look at their exposures to risk and the actions they can take to minimize their risks.

Here are just a few of the risk exposures that states and individuals face, and solutions to manage those risks in the best ways.

Monetary Collapse

The risk here is collapse of the dollar’s value, leaving anyone with dollar holdings and earnings with nearly worthless money. Add to that risk the precursor to collapse, which would be bank closings and suspension of credit card usage. A medium of exchange is necessary for commerce. If your medium of exchange becomes worthless, your ability to engage in commerce will rely only on barter. And, for most individuals, barter is a very limited medium of exchange. What would a normal city-dweller take to the grocer to exchange for food? You likely have nothing the grocer needs.

Article I, Section 8 of the US Constitution clearly states that the Congress shall have the power to “coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.” Delegating this power to the Federal Reserve was unconstitutional. The word is “coin” money, a verb. That means minting coins, not printing paper currency. The printing of irredeemable paper currency without underlying precious metal value is counterfeiting.

The US Congress has spent trillions of dollars of worthless paper money and taken on more trillions in debt. There is only one sure consequence of counterfeiting, and that is the collapse of the monetary system. Eventually, the money will become worthless. But before that occurs, the money will go through a period of massive inflation. It will look as though prices for goods and services are skyrocketing, but that is simply the way that inflation manifests itself in the marketplace. Today it takes a dollar to buy what a five-cent-piece would buy in the 1930s. The dollar’s value has diminished by 95% in that time. That also means that a person earning $100,000 in today’s money could have lived the same standard of living in 1930 for $5,000.

The nations of the world made the gold-backed dollar the reserve currency for the world. A “reserve” currency means that every nation agreed to accept dollars in payment of debts. But now that the dollar has no real value, the world is forsaking the dollar as reserve. The world looks into America’s future and sees no willingness toward fiscal responsibility or even the resolve to support the value of the dollar. Eventually the world will supplant the dollar with another reserve currency. When other nations are unwilling to accept dollars, any remaining value in American dollars will vanish.

A sub-risk in this topic is the timing and procedure used by the nations of the world as they move away from dollars. To prevent a worldwide collapse of the financial system, all nations must make perfectly-timed decisions relating to divesting themselves of American debt securities. Statistically, the chance for a mistake in timing among the nations of the world is extremely high. That means that collapse could happen very suddenly and without warning.

Monetary collapse in the United States is unavoidable. There is nothing that Washington is willing to do to avert the disaster. There is nothing that Washington could do to avert the disaster. They have already gone over the cliff. They simply haven’t hit bottom yet.

Any new nation that replicates US monetary policy will suffer the same consequences over time. A new nation that establishes a gold and silver-backed monetary system, in which gold and silver coins are the only true money, will thrive.

A new nation has only two choices for a new monetary system. Choice One is a gold and silver standard, sound money, no inflation and no debt. Choice Two is counterfeit currency, fractional reserve banking and loans from the International Monetary Fund to operate. Choice One guarantees liberty. Choice Two guarantees financial slavery.

A state that secedes from the Union to form a new nation must establish their monetary system before they do anything else. All private, public and commercial exchange, and the viability of the new nation will turn on this one decision.

Taxation

The risk here is ever-increasing taxation to levels that are unsustainable, reducing citizens to serfs and state property.

Americans are taxed in every way possible. There are personal income taxes, business income taxes, capital gains taxes, inheritance taxes, user fees, property taxes, license fees, sales taxes, Social Security and Medicare taxes and many others. The Federal tax code runs into the thousands of pages, and is so complicated that even the IRS cannot agree on the meaning of the code. The Federal Government has cleverly required employers to collect taxes at the paycheck level, making American employers the tax collectors for the Feds. But this also has the effect of making people seemingly unaware of the total tax burden confiscated from them. The concept of voluntary taxation is pure fiction.

In a new nation, all of the US Federal taxation would cease. Not one more dollar would flow to Washington. Hundreds of billions of dollars would not be extracted by force from individuals in the new nation and sent to Washington. Every individual and business that earns income would immediately begin receiving the gross amount of their earnings. So, if your weekly salary was $1,000, your paycheck would be for $1,000. Imagine that!

The method of taxation that carries the lowest risk of abuse, and the highest levels of individual liberty is the national sales tax. A new nation could opt for no income tax, which would mean no income tax withholding. A new nation could raise their revenue from only sales tax, rather than a mix of taxation schemes. A national sales tax pulls revenue from all commerce in the new nation, not just citizens. Property taxes could be entirely abandoned as a taxation scheme. The only tax code that would exist is the codification of the sales tax. There would be no other code necessary, no individual tax filings, no tax liens, no tax foreclosures. There would be no deductions and no tax-exempt organizations. The new national sales tax could be divided among the counties and cities as needed.

Voter Fraud

The risk here is that when voting cannot be determined to be accurate, confidence in the outcome of an election or referendum vanishes. In addition, this means that voting outcomes can be manipulated. In America, voting has become an anachronistic relic, and only serves to placate the populace and deceive them into believing that their vote counts for something.

It has been proven over the last 10-15 years that electronic voting machines are wholly unreliable and that their systems can be hacked to change voting outcomes. Therefore, when voting outcomes can be rigged, all elections and referendums are subject to suspicion. This happens from the highest office to the lowest, and in every referendum. The only way to alleviate this problem is through a physical ballot system, which can be counted and verified.

A new nation will have the ability to organize the new government any way it wishes to protect the integrity of the voting process.

US Debt Level

The risk here is bankruptcy and dissolution of the US Federal Government.

The US debt is almost unknowable. There are so many spending programs that are not considered in Generally Acceptable Accounting Principles (GAAP) on government books that the brightest minds cannot know the total amount of Congressional spending. Congress increases the so-called debt ceiling in every session of Congress, recognizing absolutely no restraint on their ability to spend.

A new nation will instantly forsake the US debt, leaving Washington and the remaining United States to fend for themselves. The new nation plots its new course with no debt.

Regulation

The risk here is that unconstitutional Federal regulations stifle human behavior and commerce, steal individual rights and liberty, and make good governance impossible.

There is not one second of any 24-hour period in which an American citizen is not regulated by some law. There is not one human act that an American citizen can do that is not regulated by some Federal law. Even thoughts are regulated in today’s America when you consider hate crimes laws on the books.

A new nation would start with no burdensome regulations. This would allow maximum freedom for the individual.

Health Care

The risk here is that health care in the USA has been regulated so much by the Federal Government that it is becoming unmanageable. The unconstitutional health care legislation currently being negotiated in Congress will add thousands more pages to Federal regulations, and make matters worse for individuals and insurance companies.

A new nation will have no health care system. But if the citizens of the new nation decided that they wanted to spend their own money on a national healthcare system, they could do so with only their own resolve and funds.

War and Defense Spending

The risk here is that America is experiencing negative outcomes from its foreign policy decisions, which are carried out by the military.

Any military action done outside the borders of the United States is an offensive action. You cannot defend your country by attacking another on their soil. Defense means to defend, to repel, to thwart attack. Maintaining military bases on foreign soil is unconstitutional and costly.

The defense budget for the United States has become so large that it can scarcely be controlled. And it’s more than just prosecuting foreign wars that runs up the cost. Hundreds of billions are spent annually for new weapons systems that are unnecessary, as well as maintaining the existing weapons systems. Every one of the 50 states has either a military base or businesses that help produce military goods…or both. The Department of Defense cleverly planned it that way so that cutbacks would be very unpopular and difficult to achieve.

In a new nation, properly organized, there would be no standing army, but a citizen militia, just like each state had in 1776. A new nation would walk away from the gigantic defense budget of the USA. If a new nation wanted new weapons systems, it would have to look to its founding documents for authority, then pay for the new toys itself.

Social Programs

Over time, Americans have had an intolerably heavy burden of social spending laid on their backs. Many programs are so deeply buried in the Federal budget that they are known only to the ones who benefit from them. Programs like farm subsidies, loan guarantees, and thousands of government grants given out to either promote or prevent certain human actions fill the various Cabinet-level agencies’ spending. We usually only discuss Social Security and Medicare, but think about obscure pork barrel projects. The long list of pet projects passed by Congress in a record deficit year includes $1.8 million to study why pigs smell. Other gems include $1.9 million for a water taxi in Connecticut, $3.8 million to preserve a baseball stadium in Detroit and $380,000 for a fairground in Kotzebue, Alaska, just above the Arctic Circle.

In a new nation, all of the criminal, unconstitutional spending done by all the 50 states vanishes overnight. The new nation is free from the burden of contributing their hard-earned money to waste and fraud.

Education

The risk under consideration is whether the state has an obligation to educate its citizens or not. If the new nation decides to fund education, it must collect more taxes from the people residing in the new nation. If it decides to forego compulsory education and allow parents to educate their own children and themselves, the new nation will allow for maximum individual liberty and responsibility.

Immigration

The risk in immigration is normally the strain it places on government services. But a new nation, properly organized and formed, would turn the immigration question on its head, and make many of the immigration concerns irrelevant.

If the new nation adopted the “corporation model,” no immigrant could gain citizenship without a procedure of some sort. No children born of immigrants would achieve automatic citizenship. If the new nation resisted the Siren’s song to pay welfare benefits, there would be no drain on the coffers of the new nation. The free marketplace would handle the influx of new individuals coming to the new nation to live. They would have to work and earn income, or leave the way they came. The new nation could also use its citizenship as an incentive to attract the most talented immigrants from around the world. Prices for goods, services, food and housing would accurately reflect supply and demand and directly affect immigration. Said another way, why would you immigrate to the new nation if you could not find work, housing, food, and you knew there were no welfare benefits? But if work, housing and food were available, the immigrant would contribute to the new society.

Constitutional Governance

I left this point until last to emphasize the greatest risk of all. The risk here is how to prevent fraud. The US Constitution is a mere compact between parties, and it cannot bind any two parties into a legal contract. Consequently, the US Federal Government can enact any legislation it pleases and spend any money it pleases in any manner it pleases. It truly answers to no one but itself. So the general understanding of constitutional law is misleading. My points listed above that direct your attention to the US Constitution are true, but the fact that the Constitution has no authority makes many of the arguments moot. It does not, however, diminish the risk for a seceding state. If anything, it increases the political risk. Any new government not founded on contract law is less than a gentlemen’s agreement affirmed with a handshake.

A new nation would have the opportunity to create a new form of government that is actually a legal contract between all parties. The new government could be structured like a corporation. Each person who wanted citizenship would be required to execute a legal contract. No one would be automatically born into citizenship, but would have to attain the age of majority before becoming eligible for citizenship. Stock and voting rights would be issued to each citizen.

Conclusion

The overall recognition of risk found in this article is that a government not strictly limited cannot be controlled, and in such nations, individual liberty is lost.

But a government strictly limited in authority and scope can be successfully managed with the goals to “establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare and secure the blessings of liberty to ourselves and our posterity” (excerpted from the Preamble of the US Constitution). The founding documents for the new nation must be enforceable, and the corporation model would provide for this enforceability.

Try to envision yourself and your family in a new nation created by secession. All the people you meet are excited and breathless in their anticipation of the future. The general opinion of the populace is pure unbridled optimism. The new nation’s economy is booming, the money is backed by gold and silver, and there is no inflation. “Now Hiring” signs are in all the shop windows. The newspaper’s “Help Wanted” ads are packed full. Prices for goods and services are low, and the stores are loaded with goods. Manufacturers are streaming into the new nation to take advantage of the rare pro-business atmosphere. Wages are climbing steadily in manufacturing jobs as companies compete for the best and brightest to be their employees. New businesses are being created at a fever pace. Residential and commercial construction is at a high level to meet the demand of the new residents.

All because one state recognized this historic opportunity and chased the dream of liberty through the process of state secession.

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9 Responses to Secession and Risk Management

Natural rights are the gifts of our Creator, not government. It is life, liberty and the pursuit of happiness, describing individual freedom. It only exists in America and is under assault today. Free individuals are the only pebble-droppers; the nails sticking up that government people are afraid of tripping over and seek to hammer down. It also means individual self-interest is more important than are the interest of communities. Obama and modern Democrats are opposed to that, as they are united in their support of Rousseau and Marx, not Jefferson and Madison. Check claysamerica.com for a new book, SAVE PEBBLE DROPPERS & PROSPERITY, soon to be on Amazon.com.

[…] Secession and Risk Management My business expertise is in the Insurance Risk Management field. I consult individuals and businesses on the best ways to manage their risks. So, when considering the concepts of secession for US states, I look at their exposures to risk and the actions they can take to minimize their risks. […]

[…] the deck chairs on the Titanic with more electoral changes, the way to save America will be bydecentralization and a return to the sanctity of private property rights, freedom of association and contract, and […]

[…] the deck chairs on the Titanic with more electoral changes, the way to save America will be by decentralization and a return to the sanctity of private property rights, freedom of association and contract, and […]

[…] the deck chairs on the Titanic with more electoral changes, the way to save America will be bydecentralization and a return to the sanctity of private property rights, freedom of association and contract, and […]

[…] the deck chairs on the Titanic with more electoral changes, the way to save America will be by decentralization and a return to the sanctity of private property rights, freedom of association and contract, and […]

Yes. Please secede (again). Then the rest of us can become a civilized country like Canada and you can do your huntin’, fishin’ and churchin’ in American Talibanistan….and welcome the lion’s share of your scientific and academic talent when it flees north so their kids can learn about evolution and geology. Imagine a Texas oil industry in which the petroleum geologists believe the earth is only 6000 years old. But you can’t secede from the national debt already accumulated (a big chunk of which was amassed by one of your own–Bush The Younger. And you don’t get to keep all the national parks and forests without paying for them–cash up front in the hard currency of your choice (CHF, JPY, GBP, euros, $, CDN$ accepted).

I do indeed expect most of the states to stay with Washington when the economic collapse happens. That is because they are sheep that need a shepherd, even when the shepherd is the wolf that is systematically eating them. So please sink into your comfy chair and crack open a cold one, Wooly Boy. The rest of us that know what liberty is will be working our asses off building a new nation. I don’t think you found much in the article you read (You actually CAN read, can’t you? You didn’t have an 8 year old read the big words to you?) about outdoor sports and church, or evolution and geology. I don’t give a shit what Texas oil believes. But we will definitely leave YOU to pay the national debt, and we will keep the parks on our nation’s land. DC ain’t going to send a battalion to keep Big Bend National Park, Sonny. And if we HAD to pay for them, we’d pay you in worthless US Dollars. What’s sauce for the goose… And by the way, the Bushes would be horribly uncomfortable in a seceded Texas. They would skedaddle up to Kennebunkport where they belong. Russ